Helicopters buzzed overhead, tanks thundered past, and fighter jets snaked into the sky during Burma's annual Armed Forces Day celebration on Wednesday, where one unexpected guest sat watching the pomp and ceremony from a front-row seat: opposition leader Aung San Suu Kyi.

Once an ardent critic of Burma's military and its heavy-handed role in politics, Aung San Suu Kyi sat amid many of the generals who had kept her under house arrest for nearly 20 years, and watched with them as military vehicles rolled by.

Her presence at the parade – while an obvious indication of the political reconciliation she is attempting to achieve – is sure to rile supporters and critics, many of whom question her political integrity and increasing closeness with a group that quashed dissent for nearly 50 years and has been accused of committing genocide against ethnic Rohingya Muslims.

Soldiers march during the parade in Naypyitaw. Photograph: Ye Aung Thu/AFP/Getty

The parade in the capital, Naypyitaw, which commemorates Burma's 1945 uprising against the Japanese occupation, featured more than 6,000 troops as well as speeches by generals underscoring the military's "leading role in politics".

"We will keep on marching to strengthen the democratic administrative path wished by the entire people," Senior General Min Aung Hlaing told the audience of generals, troops and politicians.

While incredible change has taken place in Burma since a nominally civilian government came to power in 2011, major ethnic and religious violence has ravaged the country under reformist President Thein Sein from Rakhine in the west to Kachin in the north, and, more recently, in central Burma, where at least 40 people have been killed and 12,000 displaced after violence between Muslims and Buddhists broke out last week.

The government has issued a state of emergency and curfews in three townships, which remain in place – resulting in the US, which recently withdrew most sanctions against the former pariah nation, issuing warnings against travel to the Mandalay region and Muslim parts of the commercial capital, Rangoon, where many fear the violence may spread.

But the recent fighting has not stopped western nations from continuing to support Burma's armed forces, which attended US-Thai military exercises for the first time this year, and which was also offered greater engagement with Australia's military.

The daughter of General Aung San, Burma's independence hero, Aung San Suu Kyi did not speak to reporters in Naypyitaw on Wednesday. But her National League for Democracy (NLD) party did choose the occasion to encourage the military to to change the 2008 constitution, underlining that it was "not in accordance with democratic norms".

It is this constitution that retains 25% of parliamentary seats for the military, and also bars Aung San Suu Kyi from running for president in 2015 elections because her late husband was British.

With a recent warning by Human Rights Watch that an impending humanitarian crisis could occur in Rakhine state – where interethnic violence led to the deaths of 200 people and displaced about 125,000 after fighting between Rakhine Buddhists and Rohingya Muslims broke out last year – many are questioning Burma's path towards democracy,, with some activists accusing the government of genocide against the Rohingya.

Min Aung Hlaing has rejected claims that the army committed genocide, saying troops had "no hatred of any of the national races". As Rohingya are not recognised by the state, that comment is possibly more telling than it seems.

And so were, perhaps, the seating arrangements at the parade. Next to Aung San Suu Kyi was General Zaw Win, deputy minister for border affairs, who accompanied the Guardian to Rakhine state in December, where he openly laughed at a teary-eyed Rohingya man in an internally displaced persons camp who pleaded: "We are real Rohingya – please recognise us."